THE NEGOTIABLE INSTRUMENTS LAW (d) with exchange, whether at a fixed rate or at the current rate; or
(e) with costs of collection or an attorney's fee, in case payment shall not be
ACT NO. 2031
February 03, 1911
THE NEGOTIABLE INSTRUMENTS LAW
I. FORM AND INTERPRETATION
Section 1. Form of negotiable instruments. - An instrument to be negotiable
must conform to the following requirements: (a) It must be in writing and
signed by the maker or drawer;
(b) Must contain an unconditional promise or order to pay a sum certain in
money;
(c) Must be payable on demand, or at a fixed or determinable future time;
(d) Must be payable to order or to bearer; and
(e) Where the instrument is addressed to a drawee, he must be named or
otherwise indicated therein with reasonable certainty.
Sec. 2. What constitutes certainty as to sum. - The sum payable is a sum
certain within the meaning of this Act, although it is to be paid:
(a) with interest; or
(b) by stated installments; or
(c) by stated installments, with a provision that, upon default in payment of
any installment or of interest, the whole shall become due; or
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made at maturity.
Sec. 3. When promise is unconditional. - An unqualified order or promise to
pay is unconditional within the meaning of this Act though coupled with: (a)
An indication of a particular fund out of which reimbursement is to be made or
a particular account to be debited with the amount; or
(b) A statement of the transaction which gives rise to the instrument.
But an order or promise to pay out of a particular fund is not unconditional.
Sec. 4. Determinable future time; what constitutes. - An instrument is payable
at a determinable future time, within the meaning of this Act, which is
expressed to be payable:
(a) At a fixed period after date or sight; or
(b) On or before a fixed or determinable future time specified therein; or
(c) On or at a fixed period after the occurrence of a specified event which is
certain to happen, though the time of happening be uncertain.
An instrument payable upon a contingency is not negotiable, and the
happening of the event does not cure the defect.
Sec. 5. Additional provisions not affecting negotiability. - An instrument which
contains an order or promise to do any act in addition to the payment of
money is not negotiable. But the negotiable character of an instrument
otherwise negotiable is not affected by a provision which: (a) authorizes the
sale of collateral securities in case the instrument be not paid at maturity; or
(b) authorizes a confession of judgment if the instrument be not paid at
maturity; or
(c) waives the benefit of any law intended for the advantage or protection of
the obligor; or
(d) gives the holder an election to require something to be done in lieu of
payment of money.
But nothing in this section shall validate any provision or stipulation otherwise
illegal.
Sec. 6. Omissions; seal; particular money. - The validity and negotiable
character of an instrument are not affected by the fact that:
(a) it is not dated; or
(b) does not specify the value given, or that any value had been given
therefor; or
(c) does not specify the place where it is drawn or the place where it is
payable; or
(d) bears a seal; or
(e) designates a particular kind of current money in which payment is to be
made.
But nothing in this section shall alter or repeal any statute requiring in certain
cases the nature of the consideration to be stated in the instrument.
Sec. 7. When payable on demand. - An instrument is payable on
demand:
(a) When it is so expressed to be payable on demand, or at sight, or on
presentation; or
(b) In which no time for payment is expressed.
Where an instrument is issued, accepted, or indorsed when overdue, it is, as
regards the person so issuing, accepting, or indorsing it, payable on demand.
Sec. 8. When payable to order. - The instrument is payable to order where it is
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drawn payable to the order of a specified person or to him or his order. It may
be drawn payable to the order of:
(a) A payee who is not maker, drawer, or drawee; or
(b) The drawer or maker; or
(c) The drawee; or
(d) Two or more payees jointly; or
(e) One or some of several payees; or
(f) The holder of an office for the time being.
Where the instrument is payable to order, the payee must be named or
otherwise indicated therein with reasonable certainty.
Sec. 9. When payable to bearer. - The instrument is payable to
bearer:
(a) When it is expressed to be so payable; or
(b) When it is payable to a person named therein or bearer; or
(c) When it is payable to the order of a fictitious or non-existing person, and
such fact was known to the person making it so payable; or
(d) When the name of the payee does not purport to be the name of any
person; or
(e) When the only or last indorsement is an indorsement in blank.
Sec. 10. Terms, when sufficient. - The instrument need not follow the language
of this Act, but any terms are sufficient which clearly indicate an intention to
conform to the requirements hereof.
Sec. 11. Date, presumption as to. - Where the instrument or an acceptance or
any indorsement thereon is dated, such date is deemed prima facie to be the
true date of the making, drawing, acceptance, or indorsement, as the case
may be.
Sec. 12. Ante-dated and post-dated. - The instrument is not invalid for the
reason only that it is ante-dated or post-dated, provided this is not done for an
illegal or fraudulent purpose. The person to whom an instrument so dated is
delivered acquires the title thereto as of the date of delivery.
Sec. 13. When date may be inserted. - Where an instrument expressed to be
payable at a fixed period after date is issued undated, or where the
acceptance of an instrument payable at a fixed period after sight is undated,
any holder may insert therein the true date of issue or acceptance, and the
instrument shall be payable accordingly. The insertion of a wrong date does
not avoid the instrument in the hands of a subsequent holder in due course;
but as to him, the date so inserted is to be regarded as the true date.
Sec. 14. Blanks; when may be filled. - Where the instrument is wanting in any
material particular, the person in possession thereof has a prima facie
authority to complete it by filling up the blanks therein. And a signature on a
blank paper delivered by the person making the signature in order that the
paper may be converted into a negotiable instrument operates as a prima
facie authority to fill it up as such for any amount. In order, however, that any
such instrument when completed may be enforced against any person who
became a party thereto prior to its completion, it must be filled up strictly in
accordance with the authority given and within a reasonable time. But if any
such instrument, after completion, is negotiated to a holder in due course, it is
valid and effectual for all purposes in his hands, and he may enforce it as if it
had been filled up strictly in accordance with the authority given and within a
reasonable time.
Sec. 15. Incomplete instrument not delivered. - Where an incomplete
instrument has not been delivered, it will not, if completed and negotiated
without authority, be a valid contract in the hands of any holder, as against
any person whose signature was placed thereon before delivery.
Sec. 16. Delivery; when effectual; when presumed. - Every contract on a
negotiable instrument is incomplete and revocable until delivery of the
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instrument for the purpose of giving effect thereto. As between immediate
parties and as regards a remote party other than a holder in due course, the
delivery, in order to be effectual, must be made either by or under the
authority of the party making, drawing, accepting, or indorsing, as the case
may be; and, in such case, the delivery may be shown to have been
conditional, or for a special purpose only, and not for the purpose of
transferring the property in the instrument. But where the instrument is in the
hands of a holder in due course, a valid delivery thereof by all parties prior to
him so as to make them liable to him is conclusively presumed. And where the
instrument is no longer in the possession of a party whose signature appears
thereon, a valid and intentional delivery by him is presumed until the contrary
is proved.
Sec. 17. Construction where instrument is ambiguous. - Where the language
of the instrument is ambiguous or there are omissions therein, the following
rules of construction apply:
(a) Where the sum payable is expressed in words and also in figures and there
is a discrepancy between the two, the sum denoted by the words is the sum
payable; but if the words are ambiguous or uncertain, reference may be had
to the figures to fix the amount;
(b) Where the instrument provides for the payment of interest, without
specifying the date from which interest is to run, the interest runs from the
date of the instrument, and if the instrument is undated, from the issue
thereof;
(c) Where the instrument is not dated, it will be considered to be dated as of
the time it was issued;
(d) Where there is a conflict between the written and printed provisions of the
instrument, the written provisions prevail;
(e) Where the instrument is so ambiguous that there is doubt whether it is a
bill or note, the holder may treat it as either at his election;
(f) Where a signature is so placed upon the instrument that it is not clear in
what capacity the person making the same intended to sign, he is to be
deemed an indorser;
(g) Where an instrument containing the word "I promise to pay" is signed by
two or more persons, they are deemed to be jointly and severally liable
thereon.
Sec. 18. Liability of person signing in trade or assumed name. - No person is
liable on the instrument whose signature does not appear thereon, except as
herein otherwise expressly provided. But one who signs in a trade or assumed
name will be liable to the same extent as if he had signed in his own name.
Sec. 19. Signature by agent; authority; how shown. - The signature of any
party may be made by a duly authorized agent. No particular form of
appointment is necessary for this purpose; and the authority of the agent may
be established as in other cases of agency.
Sec. 20. Liability of person signing as agent, and so forth. - Where the
instrument contains or a person adds to his signature words indicating that he
signs for or on behalf of a principal or in a representative capacity, he is not
liable on the instrument if he was duly authorized; but the mere addition of
words describing him as an agent, or as filling a representative character,
without disclosing his principal, does not exempt him from personal liability.
Sec. 21. Signature by procuration; effect of. - A signature
by "procuration" operates as notice that the agent has but a limited authority
to sign, and the principal is bound only in case the agent in so signing acted
within the actual limits of his authority.
Sec. 22. Effect of indorsement by infant or corporation. - The indorsement or
assignment of the instrument by a corporation or by an infant passes the
property therein, notwithstanding that from want of capacity, the corporation
or infant may incur no liability thereon.
Sec. 23. Forged signature; effect of. - When a signature is forged or made
without the authority of the person whose signature it purports to be, it is
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wholly inoperative, and no right to retain the instrument, or to give a
discharge therefor, or to enforce payment thereof against any party thereto,
can be acquired through or under such signature, unless the party against
whom it is sought to enforce such right is precluded from setting up the
forgery or want of authority.
II. CONSIDERATION
Sec. 24. Presumption of consideration. - Every negotiable instrument is
deemed prima facie to have been issued for a valuable consideration; and
every person whose signature appears thereon to have become a party
thereto for value.
Sec. 25. Value, what constitutes. — Value is any consideration sufficient to
support a simple contract. An antecedent or pre-existing debt constitutes
value; and is deemed such whether the instrument is payable on demand or
at a future time.
Sec. 26. What constitutes holder for value. - Where value has at any time
been given for the instrument, the holder is deemed a holder for value in
respect to all parties who become such prior to that time.
Sec. 27. When lien on instrument constitutes holder for value. — Where the
holder has a lien on the instrument arising either from contract or by
implication of law, he is deemed a holder for value to the extent of his lien.
Sec. 28. Effect of want of consideration. - Absence or failure of consideration is
a matter of defense as against any person not a holder in due course; and
partial failure of consideration is a defense pro tanto, whether the failure is an
ascertained and liquidated amount or otherwise.
Sec. 29. Liability of accommodation party. - An accommodation party is one
who has signed the instrument as maker, drawer, acceptor, or endorser,
without receiving value therefor, and for the purpose of lending his name to
some other person. Such a person is liable on the instrument to a holder for
value, notwithstanding such holder, at the time of taking the instrument, knew
him to be only an accommodation party.
III. NEGOTIATION

Sec. 30. What constitutes negotiation. - An instrument is negotiated when it is
transferred from one person to another in such manner as to constitute the
transferee the holder thereof. If payable to bearer, it is negotiated by delivery;
if payable to order, it is negotiated by the indorsement of the holder and
completed by delivery.
Sec. 31. Indorsement; how made. - The indorsement must be written on the
instrument itself or upon a paper attached thereto. The signature of the
indorser, without additional words, is a sufficient indorsement.
Sec. 32. Indorsement must be of entire instrument. - The indorsement must
be an indorsement of the entire instrument. An indorsement which purports to
transfer to the indorsee a part only of the amount payable, or which purports
to transfer the instrument to two or more indorsees severally, does not
operate as a negotiation of the instrument. But where the instrument has
been paid in part, it may be indorsed as to the residue.
Sec. 33. Kinds of indorsement. - An indorsement may be either special or in
blank; and it may also be either restrictive or qualified or conditional.
Sec. 34. Special indorsement; indorsement in blank. - A special indorsement
specifies the person to whom, or to whose order, the instrument is to be
payable, and the indorsement of such indorsee is necessary to the further
negotiation of the instrument. An indorsement in blank specifies no indorsee,
and an instrument so indorsed is payable to bearer, and may be negotiated by
delivery.
Sec. 35. Blank indorsement; how changed to special indorsement. - The holder
may convert a blank indorsement into a special indorsement by writing over
the signature of the indorser in blank any contract consistent with the
character of the indorsement.
Sec. 36. When indorsement restrictive. - An indorsement is restrictive which
either:
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(a) Prohibits the further negotiation of the instrument; or
(b) Constitutes the indorsee the agent of the indorser; or
(c) Vests the title in the indorsee in trust for or to the use of some other
persons.
But the mere absence of words implying power to negotiate does not make an
indorsement restrictive.
Sec. 37. Effect of restrictive indorsement; rights of indorsee. - A restrictive
indorsement confers upon the indorsee the right: (a) to receive payment of
the instrument;
(b) to bring any action thereon that the indorser could bring;
(c) to transfer his rights as such indorsee, where the form of the indorsement
authorizes him to do so.
But all subsequent indorsees acquire only the title of the first indorsee under
the restrictive indorsement.
Sec. 38. Qualified indorsement. - A qualified indorsement constitutes the
indorser a mere assignor of the title to the instrument. It may be made by
adding to the indorser's signature the words "without recourse" or any words
of similar import. Such an indorsement does not impair the negotiable
character of the instrument.
Sec. 39. Conditional indorsement. - Where an indorsement is conditional, the
party required to pay the instrument may disregard the condition and make
payment to the indorsee or his transferee whether the condition has been
fulfilled or not. But any person to whom an instrument so indorsed is
negotiated will hold the same, or the proceeds thereof, subject to the rights of
the person indorsing conditionally.
Sec. 40. Indorsement of instrument payable to bearer. - Where an instrument,
payable to bearer, is indorsed specially, it may nevertheless be further
negotiated by delivery; but the person indorsing specially is liable as indorser
to only such holders as make title through his indorsement.
Sec. 41. Indorsement where payable to two or more persons. - Where an
instrument is payable to the order of two or more payees or indorsees who are
not partners, all must indorse unless the one indorsing has authority to
indorse for the others.
Sec. 42. Effect of instrument drawn or indorsed to a person as
cashier. - Where an instrument is drawn or indorsed to a person
as "cashier" or other fiscal officer of a bank or corporation, it is deemed prima
facie to be payable to the bank or corporation of which he is such officer, and
may be negotiated by either the indorsement of the bank or corporation or the
indorsement of the officer.
Sec. 43. Indorsement where name is misspelled, and so forth. - Where the
name of a payee or indorsee is wrongly designated or misspelled, he may
indorse the instrument as therein described adding, if he thinks fit, his proper
signature.
Sec. 44. Indorsement in representative capacity. - Where any person is under
obligation to indorse in a representative capacity, he may indorse in such
terms as to negative personal liability.
Sec. 45. Time of indorsement; presumption. - Except where an indorsement
bears date after the maturity of the instrument, every negotiation is deemed
prima facie to have been effected before the instrument was overdue.
Sec. 46. Place of indorsement; presumption. - Except where the contrary
appears, every indorsement is presumed prima facie to have been made at
the place where the instrument is dated.
Sec. 47. Continuation of negotiable character. - An instrument negotiable in its
origin continues to be negotiable until it has been restrictively indorsed or
discharged by payment or otherwise.
Sec. 48. Striking out indorsement. - The holder may at any time strike out any
indorsement which is not necessary to his title. The indorser whose
indorsement is struck out, and all indorsers subsequent to him, are thereby
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relieved from liability on the instrument.
Sec. 49. Transfer without indorsement; effect of. - Where the holder of an
instrument payable to his order transfers it for value without indorsing it, the
transfer vests in the transferee such title as the transferor had therein, and
the transferee acquires in addition, the right to have the indorsement of the
transferor. But for the purpose of determining whether the transferee is a
holder in due course, the negotiation takes effect as of the time when the
indorsement is actually made.
Sec. 50. When prior party may negotiate instrument. - Where an instrument is
negotiated back to a prior party, such party may, subject to the provisions of
this Act, reissue and further negotiable the same. But he is not entitled to
enforce payment thereof against any intervening party to whom he was
personally liable.
IV. RIGHTS OF THE HOLDER
Sec. 51. Right of holder to sue; payment. - The holder of a negotiable
instrument may to sue thereon in his own name; and payment to him in due
course discharges the instrument.
Sec. 52. What constitutes a holder in due course. - A holder in due course is a
holder who has taken the instrument under the following conditions: (a) That it
is complete and regular upon its face;
(b) That he became the holder of it before it was overdue, and without notice
that it has been previously dishonored, if such was the fact;
(c) That he took it in good faith and for value;
(d) That at the time it was negotiated to him, he had no notice of any infirmity
in the instrument or defect in the title of the person negotiating it.
Sec. 53. When person not deemed holder in due course. - Where an
instrument payable on demand is negotiated on an unreasonable length of
time after its issue, the holder is not deemed a holder in due course.
Sec. 54. Notice before full amount is paid. - Where the transferee receives
notice of any infirmity in the instrument or defect in the title of the person
negotiating the same before he has paid the full amount agreed to be paid
therefor, he will be deemed a holder in due course only to the extent of the
amount therefore paid by him.
Sec. 55. When title defective. - The title of a person who negotiates an
instrument is defective within the meaning of this Act when he obtained the
instrument, or any signature thereto, by fraud, duress, or force and fear, or
other unlawful means, or for an illegal consideration, or when he negotiates it
in breach of faith, or under such circumstances as amount to a fraud.
Sec. 56. What constitutes notice of defect. - To constitutes notice of an
infirmity in the instrument or defect in the title of the person negotiating the
same, the person to whom it is negotiated must have had actual knowledge of
the infirmity or defect, or knowledge of such facts that his action in taking the
instrument amounted to bad faith.
Sec. 57. Rights of holder in due course. - A holder in due course holds the
instrument free from any defect of title of prior parties, and free from defenses
available to prior parties among themselves, and may enforce payment of the
instrument for the full amount thereof against all parties liable thereon.
Sec. 58. When subject to original defense. - In the hands of any holder other
than a holder in due course, a negotiable instrument is subject to the same
defenses as if it were non-negotiable. But a holder who derives his title
through a holder in due course, and who is not himself a party to any fraud or
illegality affecting the instrument, has all the rights of such former holder in
respect of all parties prior to the latter.
Sec. 59. Who is deemed holder in due course. - Every holder is deemed prima
facie to be a holder in due course; but when it is shown that the title of any
person who has negotiated the instrument was defective, the burden is on the
holder to prove that he or some person under whom he claims acquired the
title as holder in due course. But the last-mentioned rule does not apply in
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favor of a party who became bound on the instrument prior to the acquisition
of such defective title.
V. LIABILITIES OF PARTIES
Sec. 60. Liability of maker. - The maker of a negotiable instrument, by making
it, engages that he will pay it according to its tenor, and admits the existence
of the payee and his then capacity to indorse.
Sec. 61. Liability of drawer. - The drawer by drawing the instrument admits the
existence of the payee and his then capacity to indorse; and engages that, on
due presentment, the instrument will be accepted or paid, or both, according
to its tenor, and that if it be dishonored and the necessary proceedings on
dishonor be duly taken, he will pay the amount thereof to the holder or to any
subsequent indorser who may be compelled to pay it. But the drawer may
insert in the instrument an express stipulation negativing or limiting his own
liability to the holder.
Sec. 62. Liability of acceptor. - The acceptor, by accepting the instrument,
engages that he will pay it according to the tenor of his acceptance and
admits: (a) The existence of the drawer, the genuineness of his signature, and
his capacity and authority to draw the instrument; and
(b) The existence of the payee and his then capacity to indorse.
Sec. 63. When a person deemed indorser. - A person placing his signature
upon an instrument otherwise than as maker, drawer, or acceptor, is deemed
to be indorser unless he clearly indicates by appropriate words his intention to
be bound in some other capacity.
Sec. 64. Liability of irregular indorser. - Where a person, not otherwise a party
to an instrument, places thereon his signature in blank before delivery, he is
liable as indorser, in accordance with the following rules:
(a) If the instrument is payable to the order of a third person, he is liable to
the payee and to all subsequent parties.
(b) If the instrument is payable to the order of the maker or drawer, or is
payable to bearer, he is liable to all parties subsequent to the maker or
drawer.
(c) If he signs for the accommodation of the payee, he is liable to all parties
subsequent to the payee.
Sec. 65. Warranty where negotiation by delivery and so forth. — Every person
negotiating an instrument by delivery or by a qualified indorsement warrants:
(a) That the instrument is genuine and in all respects what it purports to be;
(b) That he has a good title to it;
(c) That all prior parties had capacity to contract;
(d) That he has no knowledge of any fact which would impair the validity of
the instrument or render it valueless.
But when the negotiation is by delivery only, the warranty extends in favor of
no holder other than the immediate transferee.
The provisions of subdivision (c) of this section do not apply to a person
negotiating public or corporation securities other than bills and notes.
Sec. 66. Liability of general indorser. - Every indorser who indorses without
qualification, warrants to all subsequent holders in due course:
(a) The matters and things mentioned in subdivisions (a), (b), and (c) of the
next preceding section; and
(b) That the instrument is, at the time of his indorsement, valid and
subsisting;
And, in addition, he engages that, on due presentment, it shall be accepted or
paid, or both, as the case may be, according to its tenor, and that if it be
dishonored and the necessary proceedings on dishonor be duly taken, he will
pay the amount thereof to the holder, or to any subsequent indorser who may
be compelled to pay it.
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Sec. 67. Liability of indorser where paper negotiable by delivery. — Where a
person places his indorsement on an instrument negotiable by delivery, he
incurs all the liability of an indorser.
Sec. 68. Order in which indorsers are liable. - As respect one another,
indorsers are liable prima facie in the order in which they indorse; but
evidence is admissible to show that, as between or among themselves, they
have agreed otherwise. Joint payees or joint indorsees who indorse are
deemed to indorse jointly and severally. robles virtual law library
Sec. 69. Liability of an agent or broker. - Where a broker or other agent
negotiates an instrument without indorsement, he incurs all the liabilities
prescribed by Section Sixty-five of this Act, unless he discloses the name of his
principal and the fact that he is acting only as agent.
VI. PRESENTATION FOR PAYMENT
Sec. 70. Effect of want of demand on principal debtor. - Presentment for
payment is not necessary in order to charge the person primarily liable on the
instrument; but if the instrument is, by its terms, payable at a special place,
and he is able and willing to pay it there at maturity, such ability and
willingness are equivalent to a tender of payment upon his part. But except as
herein otherwise provided, presentment for payment is necessary in order to
charge the drawer and indorsers.
Sec. 71. Presentment where instrument is not payable on demand and where
payable on demand. - Where the instrument is not payable on demand,
presentment must be made on the day it falls due. Where it is payable on
demand, presentment must be made within a reasonable time after its issue,
except that in the case of a bill of exchange, presentment for payment will be
sufficient if made within a reasonable time after the last negotiation thereof.
Sec. 72. What constitutes a sufficient presentment. - Presentment for
payment, to be sufficient, must be made:
(a) By the holder, or by some person authorized to receive payment on his
behalf;
(b) At a reasonable hour on a business day;
(c) At a proper place as herein defined;
(d) To the person primarily liable on the instrument, or if he is absent or
inaccessible, to any person found at the place where the presentment is
made.
Sec. 73. Place of presentment. - Presentment for payment is made at the
proper place: (a) Where a place of payment is specified in the instrument and
it is there presented;
(b) Where no place of payment is specified but the address of the person to
make payment is given in the instrument and it is there presented;
(c) Where no place of payment is specified and no address is given and the
instrument is presented at the usual place of business or residence of the
person to make payment;
(d) In any other case if presented to the person to make payment wherever he
can be found, or if presented at his last known place of business or residence.
Sec. 74. Instrument must be exhibited. - The instrument must be exhibited to
the person from whom payment is demanded, and when it is paid, must be
delivered up to the party paying it.
Sec. 75. Presentment where instrument payable at bank. - Where the
instrument is payable at a bank, presentment for payment must be made
during banking hours, unless the person to make payment has no funds there
to meet it at any time during the day, in which case presentment at any hour
before the bank is closed on that day is sufficient.
Sec. 76. Presentment where principal debtor is dead. - Where the person
primarily liable on the instrument is dead and no place of payment is
specified, presentment for payment must be made to his personal
representative, if such there be, and if, with the exercise of reasonable
diligence, he can be found.
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Sec. 77. Presentment to persons liable as partners. - Where the persons
primarily liable on the instrument are liable as partners and no place of
payment is specified, presentment for payment may be made to any one of
them, even though there has been a dissolution of the firm.
Sec. 78. Presentment to joint debtors. - Where there are several persons, not
partners, primarily liable on the instrument and no place of payment is
specified, presentment must be made to them all.
Sec. 79. When presentment not required to charge the drawer. -Presentment
for payment is not required in order to charge the drawer where he has no
right to expect or require that the drawee or acceptor will pay the instrument.
Sec. 80. When presentment not required to charge the indorser. -Presentment
is not required in order to charge an indorser where the instrument was made
or accepted for his accommodation and he has no reason to expect that the
instrument will be paid if presented.
Sec. 81. When delay in making presentment is excused. - Delay in making
presentment for payment is excused when the delay is caused by
circumstances beyond the control of the holder and not imputable to his
default, misconduct, or negligence. When the cause of delay ceases to
operate, presentment must be made with reasonable diligence.
Sec. 82. When presentment for payment is excused. - Presentment for
payment is excused: (a) Where, after the exercise of reasonable diligence,
presentment, as required by this Act, cannot be made;
(b) Where the drawee is a fictitious person;
(c) By waiver of presentment, express or implied.
Sec. 83. When instrument dishonored by non-payment. - The instrument is
dishonored by non-payment when: (a) It is duly presented for payment and
payment is refused or cannot be obtained; or
(b) Presentment is excused and the instrument is overdue and unpaid.
Sec. 84. Liability of person secondarily liable, when instrument dishonored. -
Subject to the provisions of this Act, when the instrument is dishonored by
non-payment, an immediate right of recourse to all parties secondarily liable
thereon accrues to the holder. robles virtual law library
Sec. 85. Time of maturity. - Every negotiable instrument is payable at the time
fixed therein without grace. When the day of maturity falls upon Sunday or a
holiday, the instruments falling due or becoming payable on Saturday are to
be presented for payment on the next succeeding business day except that
instruments payable on demand may, at the option of the holder, be
presented for payment before twelve o'clock noon on Saturday when that
entire day is not a holiday.
Sec. 86. Time; how computed. - When the instrument is payable at a fixed
period after date, after sight, or after that happening of a specified event, the
time of payment is determined by excluding the day from which the time is to
begin to run, and by including the date of payment.
Sec. 87. Rule where instrument payable at bank. - Where the instrument is
made payable at a bank, it is equivalent to an order to the bank to pay the
same for the account of the principal debtor thereon.
Sec. 88. What constitutes payment in due course. - Payment is made in due
course when it is made at or after the maturity of the payment to the holder
thereof in good faith and without notice that his title is defective.
VII. NOTICE OF DISHONOR
Sec. 89. To whom notice of dishonor must be given. - Except as herein
otherwise provided, when a negotiable instrument has been dishonored by
non-acceptance or non-payment, notice of dishonor must be given to the
drawer and to each indorser, and any drawer or indorser to whom such notice
is not given is discharged.
Sec. 90. By whom given. - The notice may be given by or on behalf of the
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holder, or by or on behalf of any party to the instrument who might be
compelled to pay it to the holder, and who, upon taking it up, would have a
right to reimbursement from the party to whom the notice is given.
Sec. 91. Notice given by agent. - Notice of dishonor may be given by any
agent either in his own name or in the name of any party entitled to given
notice, whether that party be his principal or not.
Sec. 92. Effect of notice on behalf of holder. - Where notice is given by or on
behalf of the holder, it inures to the benefit of all subsequent holders and all
prior parties who have a right of recourse against the party to whom it is
given.
Sec. 93. Effect where notice is given by party entitled thereto. - Where notice
is given by or on behalf of a party entitled to give notice, it inures to the
benefit of the holder and all parties subsequent to the party to whom notice is
given.
Sec. 94. When agent may give notice. - Where the instrument has been
dishonored in the hands of an agent, he may either himself give notice to the
parties liable thereon, or he may give notice to his principal. If he gives notice
to his principal, he must do so within the same time as if he were the holder,
and the principal, upon the receipt of such notice, has himself the same time
for giving notice as if the agent had been an independent holder.
Sec. 95. When notice sufficient. - A written notice need not be signed and an
insufficient written notice may be supplemented and validated by verbal
communication. A misdescription of the instrument does not vitiate the notice
unless the party to whom the notice is given is in fact misled thereby.
Sec. 96. Form of notice. - The notice may be in writing or merely oral and may
be given in any terms which sufficiently identify the instrument, and indicate
that it has been dishonored by non-acceptance or non-payment. It may in all
cases be given by delivering it personally or through the mails.
Sec. 97. To whom notice may be given. - Notice of dishonor may be given
either to the party himself or to his agent in that behalf.
Sec. 98. Notice where party is dead. - When any party is dead and his death is
known to the party giving notice, the notice must be given to a personal
representative, if there be one, and if with reasonable diligence, he can be
found. If there be no personal representative, notice may be sent to the last
residence or last place of business of the deceased.
Sec. 99. Notice to partners. - Where the parties to be notified are partners,
notice to any one partner is notice to the firm, even though there has been a
dissolution.
Sec. 100. Notice to persons jointly liable. - Notice to joint persons who are not
partners must be given to each of them unless one of them has authority to
receive such notice for the others.
Sec. 101. Notice to bankrupt. - Where a party has been adjudged a bankrupt
or an insolvent, or has made an assignment for the benefit of creditors, notice
may be given either to the party himself or to his trustee or assignee.
Sec. 102. Time within which notice must be given. - Notice may be given as
soon as the instrument is dishonored and, unless delay is excused as
hereinafter provided, must be given within the time fixed by this Act.
Sec. 103. Where parties reside in same place. - Where the person giving and
the person to receive notice reside in the same place, notice must be given
within the following times:
(a) If given at the place of business of the person to receive notice, it must be
given before the close of business hours on the day following.
(b) If given at his residence, it must be given before the usual hours of rest on
the day following.
(c) If sent by mail, it must be deposited in the post office in time to reach him
in usual course on the day following.
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Sec. 104. Where parties reside in different places. - Where the person giving
and the person to receive notice reside in different places, the notice must be
given within the following times:
(a) If sent by mail, it must be deposited in the post office in time to go by mail
the day following the day of dishonor, or if there be no mail at a convenient
hour on last day, by the next mail thereafter.
(b) If given otherwise than through the post office, then within the time that
notice would have been received in due course of mail, if it had been
deposited in the post office within the time specified in the last subdivision.
Sec. 105. When sender deemed to have given due notice. - Where notice of
dishonor is duly addressed and deposited in the post office, the sender is
deemed to have given due notice, notwithstanding any miscarriage in the
mails.
Sec. 106. Deposit in post office; what constitutes. - Notice is deemed to have
been deposited in the post-office when deposited in any branch post office or
in any letter box under the control of the post-office department.
Sec. 107. Notice to subsequent party; time of. - Where a party receives notice
of dishonor, he has, after the receipt of such notice, the same time for giving
notice to antecedent parties that the holder has after the dishonor.
Sec. 108. Where notice must be sent. - Where a party has added an address
to his signature, notice of dishonor must be sent to that address; but if he has
not given such address, then the notice must be sent as follows:
(a) Either to the post-office nearest to his place of residence or to the post-
office where he is accustomed to receive his letters; or
(b) If he lives in one place and has his place of business in another, notice may
be sent to either place; or
(c) If he is sojourning in another place, notice may be sent to the place where
he is so sojourning.
But where the notice is actually received by the party within the time specified
in this Act, it will be sufficient, though not sent in accordance with the
requirement of this section.
Sec. 109. Waiver of notice. - Notice of dishonor may be waived either before
the time of giving notice has arrived or after the omission to give due notice,
and the waiver may be expressed or implied.
Sec. 110. Whom affected by waiver. - Where the waiver is embodied in the
instrument itself, it is binding upon all parties; but, where it is written above
the signature of an indorser, it binds him only.
Sec. 111. Waiver of protest. - A waiver of protest, whether in the case of a
foreign bill of exchange or other negotiable instrument, is deemed to be a
waiver not only of a formal protest but also of presentment and notice of
dishonor.
Sec. 112. When notice is dispensed with. - Notice of dishonor is dispensed with
when, after the exercise of reasonable diligence, it cannot be given to or does
not reach the parties sought to be charged.
Sec. 113. Delay in giving notice; how excused. - Delay in giving notice of
dishonor is excused when the delay is caused by circumstances beyond the
control of the holder and not imputable to his default, misconduct, or
negligence. When the cause of delay ceases to operate, notice must be given
with reasonable diligence.
Sec. 114. When notice need not be given to drawer. - Notice of dishonor is not
required to be given to the drawer in either of the following cases:
(a) Where the drawer and drawee are the same person;
(b) When the drawee is fictitious person or a person not having capacity to
contract;
(c) When the drawer is the person to whom the instrument is presented for
payment;
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(d) Where the drawer has no right to expect or require that the drawee or
acceptor will honor the instrument;
(e) Where the drawer has countermanded payment.
Sec. 115. When notice need not be given to indorser. — Notice of dishonor is
not required to be given to an indorser in either of the following cases:
(a) When the drawee is a fictitious person or person not having capacity to
contract, and the indorser was aware of that fact at the time he indorsed the
instrument;
(b) Where the indorser is the person to whom the instrument is presented for
payment;
(c) Where the instrument was made or accepted for his accommodation.
Sec. 116. Notice of non-payment where acceptance refused. - Where due
notice of dishonor by non-acceptance has been given, notice of a subsequent
dishonor by non-payment is not necessary unless in the meantime the
instrument has been accepted.
Sec. 117. Effect of omission to give notice of non-acceptance. - An omission to
give notice of dishonor by non-acceptance does not prejudice the rights of a
holder in due course subsequent to the omission.
Sec. 118. When protest need not be made; when must be made. - Where any
negotiable instrument has been dishonored, it may be protested for non-
acceptance or non-payment, as the case may be; but protest is not required
except in the case of foreign bills of exchange.robles virtual law library
VIII. DISCHARGE OF NEGOTIABLE INSTRUMENTS
Sec. 119. Instrument; how discharged. - A negotiable instrument is
discharged:
(a) By payment in due course by or on behalf of the principal debtor;
(b) By payment in due course by the party accommodated, where the
instrument is made or accepted for his accommodation;
(c) By the intentional cancellation thereof by the holder;
(d) By any other act which will discharge a simple contract for the payment of
money;
(e) When the principal debtor becomes the holder of the instrument at or after
maturity in his own right.
Sec. 120. When persons secondarily liable on the instrument are discharged.
- A person secondarily liable on the instrument is discharged: (a) By any act
which discharges the instrument;
(b) By the intentional cancellation of his signature by the holder;
(c) By the discharge of a prior party;
(d) By a valid tender or payment made by a prior party;
(e) By a release of the principal debtor unless the holder's right of recourse
against the party secondarily liable is expressly reserved;
(f) By any agreement binding upon the holder to extend the time of payment
or to postpone the holder's right to enforce the instrument unless made with
the assent of the party secondarily liable or unless the right of recourse
against such party is expressly reserved.
Sec. 121. Right of party who discharges instrument. - Where the instrument is
paid by a party secondarily liable thereon, it is not discharged; but the party
so paying it is remitted to his former rights as regard all prior parties, and he
may strike out his own and all subsequent indorsements and against
negotiate the instrument, except:
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(a) Where it is payable to the order of a third person and has been paid by the
drawer; and
(b) Where it was made or accepted for accommodation and has been paid by
the party accommodated.
Sec. 122. Renunciation by holder. - The holder may expressly renounce his
rights against any party to the instrument before, at, or after its maturity. An
absolute and unconditional renunciation of his rights against the principal
debtor made at or after the maturity of the instrument discharges the
instrument. But a renunciation does not affect the rights of a holder in due
course without notice. A renunciation must be in writing unless the instrument
is delivered up to the person primarily liable thereon.
Sec. 123. Cancellation; unintentional; burden of proof. - A cancellation made
unintentionally or under a mistake or without the authority of the holder, is
inoperative but where an instrument or any signature thereon appears to have
been cancelled, the burden of proof lies on the party who alleges that the
cancellation was made unintentionally or under a mistake or without
authority.
Sec. 124. Alteration of instrument; effect of. - Where a negotiable instrument
is materially altered without the assent of all parties liable thereon, it is
avoided, except as against a party who has himself made, authorized, or
assented to the alteration and subsequent indorsers.
But when an instrument has been materially altered and is in the hands of a
holder in due course not a party to the alteration, he may enforce payment
thereof according to its original tenor.
Sec. 125. What constitutes a material alteration. - Any alteration which
changes: (a) The date;
(b) The sum payable, either for principal or interest;
(c) The time or place of payment:
(d) The number or the relations of the parties;
(e) The medium or currency in which payment is to be made;
(f) Or which adds a place of payment where no place of payment is specified,
or any other change or addition which alters the effect of the instrument in
any respect, is a material alteration.
BILLS OF EXCHANGE
IX. FORM AND INTERPRETATION
Sec. 126. Bill of exchange, defined. - A bill of exchange is an unconditional
order in writing addressed by one person to another, signed by the person
giving it, requiring the person to whom it is addressed to pay on demand or at
a fixed or determinable future time a sum certain in money to order or to
bearer.
Sec. 127. Bill not an assignment of funds in hands of drawee. - A bill of itself
does not operate as an assignment of the funds in the hands of the drawee
available for the payment thereof, and the drawee is not liable on the bill
unless and until he accepts the same.
Sec. 128. Bill addressed to more than one drawee. - A bill may be addressed
to two or more drawees jointly, whether they are partners or not; but not to
two or more drawees in the alternative or in succession.
Sec. 129. Inland and foreign bills of exchange. - An inland bill of exchange is a
bill which is, or on its face purports to be, both drawn and payable within the
Philippines. Any other bill is a foreign bill. Unless the contrary appears on the
face of the bill, the holder may treat it as an inland bill.
Sec. 130. When bill may be treated as promissory note. - Where in a bill the
drawer and drawee are the same person or where the drawee is a fictitious
person or a person not having capacity to contract, the holder may treat the
instrument at his option either as a bill of exchange or as a promissory note.
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Sec. 131. Referee in case of need. - The drawer of a bill and any indorser may
insert thereon the name of a person to whom the holder may resort in case of
need; that is to say, in case the bill is dishonored by non-acceptance or non-
payment. Such person is called a referee in case of need. It is in the option of
the holder to resort to the referee in case of need or not as he may see fit.
X. ACCEPTANCE
Sec. 132. Acceptance; how made, by and so forth. - The acceptance of a bill is
the signification by the drawee of his assent to the order of the drawer. The
acceptance must be in writing and signed by the drawee. It must not express
that the drawee will perform his promise by any other means than the
payment of money.
Sec. 133. Holder entitled to acceptance on face of bill. - The holder of a bill
presenting the same for acceptance may require that the acceptance be
written on the bill, and, if such request is refused, may treat the bill as
dishonored.
Sec. 134. Acceptance by separate instrument. - Where an acceptance is
written on a paper other than the bill itself, it does not bind the acceptor
except in favor of a person to whom it is shown and who, on the faith thereof,
receives the bill for value.
Sec. 135. Promise to accept; when equivalent to acceptance. - An
unconditional promise in writing to accept a bill before it is drawn is deemed
an actual acceptance in favor of every person who, upon the faith thereof,
receives the bill for value.
Sec. 136. Time allowed drawee to accept. - The drawee is allowed twenty-four
hours after presentment in which to decide whether or not he will accept the
bill; the acceptance, if given, dates as of the day of presentation.
Sec. 137. Liability of drawee returning or destroying bill. - Where a drawee to
whom a bill is delivered for acceptance destroys the same, or refuses within
twenty-four hours after such delivery or within such other period as the holder
may allow, to return the bill accepted or non-accepted to the holder, he will be
deemed to have accepted the same.
Sec. 138. Acceptance of incomplete bill. - A bill may be accepted before it has
been signed by the drawer, or while otherwise incomplete, or when it is
overdue, or after it has been dishonored by a previous refusal to accept, or by
non payment. But when a bill payable after sight is dishonored by non-
acceptance and the drawee subsequently accepts it, the holder, in the
absence of any different agreement, is entitled to have the bill accepted as of
the date of the first presentment.
Sec. 139. Kinds of acceptance. - An acceptance is either general or qualified. A
general acceptance assents without qualification to the order of the drawer. A
qualified acceptance in express terms varies the effect of the bill as drawn.
Sec. 140. What constitutes a general acceptance? - An acceptance to pay at a
particular place is a general acceptance unless it expressly states that the bill
is to be paid there only and not elsewhere.
Sec. 141. Qualified acceptance. - An acceptance is qualified which is: (a)
Conditional; that is to say, which makes payment by the acceptor dependent
on the fulfillment of a condition therein stated;
(b) Partial; that is to say, an acceptance to pay part only of the amount for
which the bill is drawn;
(c) Local; that is to say, an acceptance to pay only at a particular place;
(d) Qualified as to time;
(e) The acceptance of some, one or more of the drawees but not of all.
Sec. 142. Rights of parties as to qualified acceptance. - The holder may refuse
to take a qualified acceptance and if he does not obtain an unqualified
acceptance, he may treat the bill as dishonored by non-acceptance. Where a
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qualified acceptance is taken, the drawer and indorsers are discharged from
liability on the bill unless they have expressly or impliedly authorized the
holder to take a qualified acceptance, or subsequently assent thereto. When
the drawer or an indorser receives notice of a qualified acceptance, he must,
within a reasonable time, express his dissent to the holder or he will be
deemed to have assented thereto.
XI. PRESENTMENT FOR ACCEPTANCE
Sec. 143. When presentment for acceptance must be made. - Presentment for
acceptance must be made:
(a) Where the bill is payable after sight, or in any other case, where
presentment for acceptance is necessary in order to fix the maturity of the
instrument; or
(b) Where the bill expressly stipulates that it shall be presented for
acceptance; or
(c) Where the bill is drawn payable elsewhere than at the residence or place of
business of the drawee.
In no other case is presentment for acceptance necessary in order to render
any party to the bill liable.
Sec. 144. When failure to present releases drawer and indorser. - Except as
herein otherwise provided, the holder of a bill which is required by the next
preceding section to be presented for acceptance must either present it for
acceptance or negotiate it within a reasonable time. If he fails to do so, the
drawer and all indorsers are discharged.
Sec. 145. Presentment; how made. - Presentment for acceptance must be
made by or on behalf of the holder at a reasonable hour, on a business day
and before the bill is overdue, to the drawee or some person authorized to
accept or refuse acceptance on his behalf; and
(a) Where a bill is addressed to two or more drawees who are not partners,
presentment must be made to them all unless one has authority to accept or
refuse acceptance for all, in which case presentment may be made to him
only;
(b) Where the drawee is dead, presentment may be made to his personal
representative;
Sec. 149. When dishonored by nonacceptance. - A bill is dishonored by non-
acceptance:
(a) When it is duly presented for acceptance and such an acceptance as is
prescribed by this Act is refused or can not be obtained; or
(b) When presentment for acceptance is excused and the bill is not accepted.

Sec. 150. Duty of holder where bill not accepted. - Where a bill is duly
(c) Where the drawee has been adjudged a bankrupt or an insolvent or has presented for acceptance and is not accepted within the prescribed time, the
made an assignment for the benefit of creditors, presentment may be made to person presenting it must treat the bill as dishonored by nonacceptance or he
him or to his trustee or assignee. loses the right of recourse against the drawer and indorsers.
Sec. 146. On what days presentment may be made. - A bill may be presented
for acceptance on any day on which negotiable instruments may be presented Sec. 151. Rights of holder where bill not accepted. - When a bill is dishonored
for payment under the provisions of Sections seventy-two and eighty-five of by nonacceptance, an immediate right of recourse against the drawer and
this Act. When Saturday is not otherwise a holiday, presentment for indorsers accrues to the holder and no presentment for payment is necessary.
acceptance may be made before twelve o'clock noon on that day.
XII. PROTEST
Sec. 147. Presentment where time is insufficient. - Where the holder of a bill
drawn payable elsewhere than at the place of business or the residence of the
drawee has no time, with the exercise of reasonable diligence, to present the
Sec. 152. In what cases protest necessary. - Where a foreign bill appearing on
bill for acceptance before presenting it for payment on the day that it falls
its face to be such is dishonored by nonacceptance, it must be duly protested
due, the delay caused by presenting the bill for acceptance before presenting
for nonacceptance, by nonacceptance is dishonored and where such a bill
it for payment is excused and does not discharge the drawers and indorsers.
which has not previously been dishonored by nonpayment, it must be duly
protested for nonpayment. If it is not so protested, the drawer and indorsers
Sec. 148. Where presentment is excused. - Presentment for acceptance is
are discharged. Where a bill does not appear on its face to be a foreign bill,
excused and a bill may be treated as dishonored by non-acceptance in either
protest thereof in case of dishonor is unnecessary.
of the following cases:

(a) Where the drawee is dead, or has absconded, or is a fictitious person or a
person not having capacity to contract by bill.
(b) Where, after the exercise of reasonable diligence, presentment can not be
made.
(c) Where, although presentment has been irregular, acceptance has been
refused on some other ground.
Sec. 153. Protest; how made. - The protest must be annexed to the bill or
must contain a copy thereof, and must be under the hand and seal of the
notary making it and must specify:
(a) The time and place of presentment;
(b) The fact that presentment was made and the manner thereof;
(c) The cause or reason for protesting the bill;

16 | P a g e

(d) The demand made and the answer given, if any, or the fact that the
drawee or acceptor could not be found.
Sec. 154. Protest, by whom made. - Protest may be made by:
(a) A notary public; or
(b) By any respectable resident of the place where the bill is dishonored, in the
presence of two or more credible witnesses.
Sec. 155. Protest; when to be made. - When a bill is protested, such protest
must be made on the day of its dishonor unless delay is excused as herein
provided. When a bill has been duly noted, the protest may be subsequently
extended as of the date of the noting.
Sec. 156. Protest; where made. - A bill must be protested at the place where it
is dishonored, except that when a bill drawn payable at the place of business
or residence of some person other than the drawee has been dishonored by
nonacceptance, it must be protested for non-payment at the place where it is
expressed to be payable, and no further presentment for payment to, or
demand on, the drawee is necessary.
Sec. 157. Protest both for non-acceptance and non-payment. - A bill which has
been protested for non-acceptance may be subsequently protested for non-
payment.
Sec. 158. Protest before maturity where acceptor insolvent. - Where the
acceptor has been adjudged a bankrupt or an insolvent or has made an
assignment for the benefit of creditors before the bill matures, the holder may
cause the bill to be protested for better security against the drawer and
indorsers. robles virtual law library
Sec. 159. When protest dispensed with. - Protest is dispensed with by any
circumstances which would dispense with notice of dishonor. Delay in noting
or protesting is excused when delay is caused by circumstances beyond the
control of the holder and not imputable to his default, misconduct, or
negligence. When the cause of delay ceases to operate, the bill must be noted
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or protested with reasonable diligence.
Sec. 160. Protest where bill is lost and so forth. - When a bill is lost or
destroyed or is wrongly detained from the person entitled to hold it, protest
may be made on a copy or written particulars thereof.
XIII. ACCEPTANCE FOR HONOR
Sec. 161. When bill may be accepted for honor. - When a bill of exchange has
been protested for dishonor by non-acceptance or protested for better
security and is not overdue, any person not being a party already liable
thereon may, with the consent of the holder, intervene and accept the
bill supra protest for the honor of any party liable thereon or for the honor of
the person for whose account the bill is drawn. The acceptance for honor may
be for part only of the sum for which the bill is drawn; and where there has
been an acceptance for honor for one party, there may be a further
acceptance by a different person for the honor of another party.
Sec. 162. Acceptance for honor; how made. - An acceptance for honor supra
protest must be in writing and indicate that it is an acceptance for honor and
must be signed by the acceptor for honor.
Sec. 163. When deemed to be an acceptance for honor of the drawer. - Where
an acceptance for honor does not expressly state for whose honor it is made,
it is deemed to be an acceptance for the honor of the drawer.
Sec. 164. Liability of the acceptor for honor. - The acceptor for honor is liable
to the holder and to all parties to the bill subsequent to the party for whose
honor he has accepted.
Sec. 165. Agreement of acceptor for honor. - The acceptor for honor, by such
acceptance, engages that he will, on due presentment, pay the bill according
to the terms of his acceptance provided it shall not have been paid by the
drawee and provided also that is shall have been duly presented for payment
and protested for non-payment and notice of dishonor given to him.
Sec. 166. Maturity of bill payable after sight; accepted for honor. - Where a bill
payable after sight is accepted for honor, its maturity is calculated from the
date of the noting for non-acceptance and not from the date of the
acceptance for honor.
Sec. 167. Protest of bill accepted for honor, and so forth. - Where a dishonored
bill has been accepted for honor supra protest or contains a referee in case of
need, it must be protested for non-payment before it is presented for payment
to the acceptor for honor or referee in case of need.
Sec. 168. Presentment for payment to acceptor for honor, how made. -
Presentment for payment to the acceptor for honor must be made as follows:
(a) If it is to be presented in the place where the protest for non-payment was
made, it must be presented not later than the day following its maturity.
(b) If it is to be presented in some other place than the place where it was
protested, then it must be forwarded within the time specified in Section one
hundred and four.
Sec. 169. When delay in making presentment is excused. - The provisions of
Section eighty-one apply where there is delay in making presentment to the
acceptor for honor or referee in case of need.
Sec. 170. Dishonor of bill by acceptor for honor. - When the bill is dishonored
by the acceptor for honor, it must be protested for non-payment by him.
XIV. PAYMENT FOR HONOR
Sec. 171. Who may make payment for honor. - Where a bill has been
protested for non-payment, any person may intervene and pay it supraprotest
for the honor of any person liable thereon or for the honor of the person for
whose account it was drawn.
Sec. 172. Payment for honor; how made. - The payment for
honor supra protest, in order to operate as such and not as a mere voluntary
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payment, must be attested by a notarial act of honor which may be appended
to the protest or form an extension to it.
Sec. 173. Declaration before payment for honor. - The notarial act of honor
must be founded on a declaration made by the payer for honor or by his agent
in that behalf declaring his intention to pay the bill for honor and for whose
honor he pays.
Sec. 174. Preference of parties offering to pay for honor. - Where two or more
persons offer to pay a bill for the honor of different parties, the person whose
payment will discharge most parties to the bill is to be given the preference.
Sec. 175. Effect on subsequent parties where bill is paid for honor. - Where a
bill has been paid for honor, all parties subsequent to the party for whose
honor it is paid are discharged but the payer for honor is subrogated for, and
succeeds to, both the rights and duties of the holder as regards the party for
whose honor he pays and all parties liable to the latter.
Sec. 176. Where holder refuses to receive payment supra protest. -Where the
holder of a bill refuses to receive payment supra protest, he loses his right of
recourse against any party who would have been discharged by such
payment.
Sec. 177. Rights of payer for honor. - The payer for honor, on paying to the
holder the amount of the bill and the notarial expenses incidental to its
dishonor, is entitled to receive both the bill itself and the protest.
XV. BILLS IN SET
Sec. 178. Bills in set constitute one bill. - Where a bill is drawn in a set, each
part of the set being numbered and containing a reference to the other parts,
the whole of the parts constitutes one bill.
Sec. 179. Right of holders where different parts are negotiated. - Where two or
more parts of a set are negotiated to different holders in due course, the
holder whose title first accrues is, as between such holders, the true owner of
the bill. But nothing in this section affects the right of a person who, in due
course, accepts or pays the parts first presented to him.
Sec. 180. Liability of holder who indorses two or more parts of a set to
different persons. - Where the holder of a set indorses two or more parts to
different persons he is liable on every such part, and every indorser
subsequent to him is liable on the part he has himself indorsed, as if such
parts were separate bills.
Sec. 181. Acceptance of bill drawn in sets. - The acceptance may be written
on any part and it must be written on one part only. If the drawee accepts
more than one part and such accepted parts negotiated to different holders in
due course, he is liable on every such part as if it were a separate bill.
Sec. 182. Payment by acceptor of bills drawn in sets. - When the acceptor of a
bill drawn in a set pays it without requiring the part bearing his acceptance to
be delivered up to him, and the part at maturity is outstanding in the hands of
a holder in due course, he is liable to the holder thereon.
Sec. 183. Effect of discharging one of a set. - Except as herein otherwise
provided, where any one part of a bill drawn in a set is discharged by payment
or otherwise, the whole bill is discharged.
XVI. PROMISSORY NOTES AND CHECKS
Sec. 184. Promissory note, defined. - A negotiable promissory note within the
meaning of this Act is an unconditional promise in writing made by one person
to another, signed by the maker, engaging to pay on demand, or at a fixed or
determinable future time, a sum certain in money to order or to bearer. Where
a note is drawn to the maker's own order, it is not complete until indorsed by
him.
Sec. 185. Check, defined. - A check is a bill of exchange drawn on a bank
payable on demand. Except as herein otherwise provided, the provisions of
this Act applicable to a bill of exchange payable on demand apply to a check.
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Sec. 186. Within what time a check must be presented. - A check must be
presented for payment within a reasonable time after its issue or the drawer
will be discharged from liability thereon to the extent of the loss caused by the
delay.
Sec. 187. Certification of check; effect of. - Where a check is certified by the
bank on which it is drawn, the certification is equivalent to an acceptance.
Sec. 188. Effect where the holder of check procures it to be certified. -Where
the holder of a check procures it to be accepted or certified, the drawer and all
indorsers are discharged from liability thereon.
Sec. 189. When check operates as an assignment. - A check of itself does not
operate as an assignment of any part of the funds to the credit of the drawer
with the bank, and the bank is not liable to the holder unless and until it
accepts or certifies the check.
XVII. GENERAL PROVISIONS
Sec. 190. Short title. - This Act shall be known as the Negotiable Instruments
Law.
Sec. 191. Definition and meaning of terms. - In this Act, unless the contract
otherwise requires:
"Acceptance" means an acceptance completed by delivery or notification;
"Action" includes counterclaim and set-off;
"Bank" includes any person or association of persons carrying on the business
of banking, whether incorporated or not;
"Bearer" means the person in possession of a bill or note which is payable to
bearer;
 Sec. 195. Application of Act. - The provisions of this Act do not apply to
"Bill" means bill of exchange, and "note" means negotiable promissory note; negotiable instruments made and delivered prior to the taking effect hereof.

"Delivery" means transfer of possession, actual or constructive, from one
person to another;
"Holder" means the payee or indorsee of a bill or note who is in possession of
it, or the bearer thereof;
"Indorsement" means an indorsement completed by delivery;
"Instrument" means negotiable instrument;
"Issue" means the first delivery of the instrument, complete in form, to a
person who takes it as a holder;
"Person" includes a body of persons, whether incorporated or not;
Sec. 196. Cases not provided for in Act. - Any case not provided for in this Act
shall be governed by the provisions of existing legislation or in default thereof,
by the rules of the law merchant.
Sec. 197. Repeals. - All acts and laws and parts thereof inconsistent with this
Act are hereby repealed.
Sec. 198. Time when Act takes effect. - This Act shall take effect ninety days
after its publication in the Official Gazette of the Philippine Islands shall have
been completed.
Enacted: February 3, 1911

"Value" means valuable consideration;

"Written" includes printed, and "writing" includes print.

Sec. 192. Persons primarily liable on instrument. - The

person "primarily" liable on an instrument is the person who, by the terms of
the instrument, is absolutely required to pay the same. All other parties
are "secondarily" liable.

Sec. 193. Reasonable time, what constitutes. - In determining what is

a "reasonable time" regard is to be had to the nature of the instrument, the
usage of trade or business with respect to such instruments, and the facts of
the particular case.

Sec. 194. Time, how computed; when last day falls on holiday. - Where the
day, or the last day for doing any act herein required or permitted to be done
falls on a Sunday or on a holiday, the act may be done on the next succeeding
secular or business day.

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